Northumbria is a special place to live. Incomers quickly recognise a fierce regional pride and a tribal fervour about local communities. Cleo Laine, recently singing in the Sage on the Gateshead side of the Tyne, brought gasps of disbelief from an otherwise adoring audience when she announced how delighted she was to be in Newcastle.

I'm sure somebody will since have told her that not only the Sage, but the Baltic, the Millennium Bridge and the Angel of the North are all Gateshead cultural initiatives.

So, too, in a previous century, was the Shipley Art Gallery. On his death in 1909, local solicitor and art collector Joseph Shipley left some of his fortune and all of his pictures to the City of Newcastle. The bequest was declined. Gateshead accepted and built a gallery to house a collection that has grown to more than 10,000 items.

In recent years, the Shipley Art Gallery has become established as a designated national centre for contemporary art, craft and design. In a long-awaited new development, the new gallery, Designs for Life, opened in March.

Two large rooms have been restored to their Edwardian splendour, including the original long-hidden glazing. The objects on display range over 2,000 years. In themed cases the precious and the unique are shown side by side with the prosaic and the mass produced.

The serious purpose of the gallery is to explain and explore the infinite variety of ways in which objects are made. The displays and panels have a delightful blend of erudition and wit. Nowhere is this better exemplified than in the title panel, with its 16 tiles produced by 16 artists in a variety of media: fabric, wood, stone and metal. It is endearingly labelled PLEASE TOUCH.

The exhibition's themed cases seek to explain the form and function of design in a way that suggests there are spiritual as well as practical values. It asks "Why decoration?" - reminding us that pattern operates to different rules in many cultures, that it can indicate status or provoke amusement.

The objects and their display is fascinating, drawing out intellectual and visual connections. A case of culinary items included a Dr Who lunch box of 2002, a sublimely beautiful Newcastle silver marrow spoon from 1785 and a covetable bachelor supper set from Gateshead (c1867).

In a case of decorated artefacts, there is an engraved silver/oak inscribed cigarette box of 1917/1918 and a quart-sized silver tankard of the late 17th century. Between them sits an 1875 chookie egg. Crafted in plain earthenware, they were placed under broody hens to encourage laying. Decorated and personalised, they were used as christening presents for newborn babies.

Objects come from around the world, but include a representation of regional crafts. Jostling for attention are a mailing Anzac cup and saucer, some Sunderland glass, and mass-produced, high-quality glassware by Davidson and Sowerby, and Pyrex by Joblings.

Special displays illustrate the history of the chair, of domestic lighting, and of the teapot, both domestic and grand. The ubiquitous two-pint Brown Betty shares a case with, among other pots, an exquisite bullet silver and ebonised boxwood pot hallmarked "Newcastle 1732".

Displaying craft items is a difficult art; a greater challenge than paintings, social history or the chronology of individual cultures. The results are often banal or, even worse, twee. Such a fate has been avoided with Designs for Life.

The gallery has character. You can sense the energy and enthusiasm of the curators Amy Barker and Alex Thirlaway and the project coordinator Anna Patecka-Gebka. They wear their scholarship lightly and they have produced one of the most delightful museum initiatives I have experienced for many years.

Would that I could say the same about the touring exhibition Out of the Ordinary, Spectacular Craft, jointly compiled by the Victoria and Albert Museum and the Crafts Council and on show in adjacent rooms. Compared with the integrity of Designs for Life, it lacks vitality, possessing an underlying compulsion to be different to the point of silliness.

Like much international contemporary art and crafts, the artefacts are too knowing, too determined in their manipulative assault on the viewer. The accompanying catalogue insists that the eight international artists are "preoccupied with the everyday as a subject".

Mundane or familiar things such as the paint splatter on a dust sheet, a human breath or a weed pushing up through a crack are presented in playful and unexpected ways. Look closely or you might miss them.

One installation uses thousands of small human figures hand cut from tissue paper in order to illustrate a somewhat obvious point - "the delicate fragility of human beings".

The artist explains that the philosophy is secondary, what is more important is the process you use to create. Another artist uses diamonds and gold to transform Rawlplugs and screws into precious objects to be looked at rather than used.

Nothing could more clearly emphasise the essential sterility of Out of the Ordinary when compared with Designs for Life. The objects in the latter are to be looked at, used and loved. It was noticeable that visitors were spending more than an hour in the Shipley's exhibition, less than 10 bemused minutes in the touring exhibition.

Thank goodness then that the latter is temporary and will be replaced later in the year with exhibitions of printed cloths from Ghana, monumental porcelain inspired by China and an intriguing exhibition called 18th-Century Blues: Exploring the Melancholy Mind. The pleasures and lessons of Designs for Life linger, and that is no bad thing.

Peter Lewis is a past director of Beamish, the North of England Open Air Museum
Project data

Cost:£600,000
Main funders: Heritage Lottery Fund, DCMS/Wolfson Foundation Museums and Galleries Improvement Fund
Exhibition design and project management: Haley Sharpe Design
Architect and project management: GWK